According to statistics, the e-commerce market has been growing by 17-18% annually. People are increasingly buying online, which means e-commerce is becoming a profitable investment and an effective business tool. However, traditional online stores are gradually giving way to peer-to-peer marketplace platforms which are gaining incredible popularity. As PwC predicts, the so-called "sharing economy" will have reached $355 billion by 2025.

To assess the prospect of building a marketplace startup, you should look at the successes of the market leaders, such as Amazon, eBay, Etsy, Airbnb, and other mastodons of the p2p e-commerce segment. It's high time you joined the ranks of these popular online marketplaces. And our team is ready to provide you with some useful tips on the issue, for we have experience and expertise that we are always happy to share with you.

What is an online P2P marketplace?

A peer to peer marketplace platform is an online business model where buyers and sellers exchange products and services. For example, Etsy allows sellers to sell their handcrafted goods to consumers. Uber lets you order a ride to get anywhere. Buyers and sellers can typically change their roles on a P2P platform, as there’s no strong distinction between them. Today you can be a rider on Uber, while tomorrow you can easily become a driver. In other words, both user groups can exchange goods or services on a peer-to-peer marketplace.

A P2P marketplace platform removes the intermediary who connects consumers to product or service providers. This serves to lower the cost for goods and services, enable faster transaction times, and make the process of purchasing much more convenient for both parties.

For example, imagine you’re a craftsperson and you want to sell beaded jewelry. Building a store is time-consuming and requires big investments on your part. However, you can use an Etsy-like platform to host your beaded jewelry. The platform has an active user base and can become an online shop of its own. Or imagine you’re moving to a different city. You may decide to rent your current apartment on Airbnb or HomeAway instead of selling it. You don’t have to post an ad in the paper. You simply use an online service with an inventory management system, real-time analytics engine, and automated pricing tool.

Peer-to-peer business model

We all want to get the best deals. Traditionally, if you want to purchase something or book a service, there’s someone who facilitates this interaction. In logistics, it’s a broker; in real estate, it’s an agent; with a taxi, it’s a dispatcher. In other words, there’s normally an intermediary. In the case of an online solution, the platform itself becomes this intermediary, allowing buyers and sellers to connect with each other.

Let’s look at how Etsy’s business model works. Etsy charges sellers for listing their goods. The listing fee is $0.20 per item. Then the platform takes a 3.5% fee for sales completed on the website. The company has seen annual revenue growth as shown by Statista. In 2016, Etsy made over $364 million. In 2017, its revenue grew to $441 million.

Marketplace apps gave a good start to the sharing economy because they took away the intermediaries. People operate on the platform and it charges them a fee or percentage. This fee is much lower than if you were to purchase goods or services in a traditional way, so you can actually save money if you shop for goods or services on a platform.

Focused niche

When starting an online marketplace, you should understand where the problem is and resolve it with technology. BlaBlaCar and Airbnb were great at identifying a problem and targeting one niche. Airbnb spotted that people wanted to rent their apartments. BlaBlaCar focused on drivers and passengers who wanted to share the cost of a lengthy ride.

One of our American clients used to be an intermediary in the legal industry. Since they knew the niche well, they decided to create a marketplace platform that connects court reporters, interpreters, videographers, and other legal service professionals to courts. This on-demand court reporting platform we developed for our client is called NexDep, and it makes it really easy to find the right people for court hearings. Clients can post hearings with detailed descriptions, and legal service providers can respond to those requests.

If you want to develop a marketplace, you should do the same thing — find a problem and solve it using a marketplace business model. Creating a platform boils down to helping two markets connect and eliminating the need for an intermediary.

Сonvenienсe and flexibility

A peer to peer marketplace platform is convenient. It lets customers quickly find goods or services. Airbnb allows people to conveniently browse properties for rent. All you need to do is go to the website or mobile app and find a list of accommodation options with pictures. You can filter by number of guests, accomodation type, price, trip type, and more. You can then view details of listings with reviews and ratings and book right on the platform.

If you go to Etsy, you’ll find all sorts of sellers offering their handmade goods and vintage items. These sellers don’t have to create separate websites or build brick-and-mortar stores. The platform can feature all their goods, becoming an online shop for sellers.

TaskRabbit, a collaborative peer to peer space, lets you find verified taskers who can come to your house to complete tasks for you. Maybe you don’t know how to fix your broken chair or you have clogged pipes. The app features different tasks and a database of taskers who are matched to your query.

In other words, this growing market, a sort of eBay for services and goods, allows users to interact easily and perform transactions and exchanges by means of features each platform offers.

How to build a marketplace

Now that we’ve pinpointed which philosophy makes two sided marketplace platforms work, we’re going to tell you how to build a platform.

You can either build a marketplace from scratch or use existing solutions or open source marketplace platforms. Your choice will depend on your budget and requirements.

Using a ready-made solution. If you’re pressed for time and want to launch as soon as possible, then you can use a ready-made solution. You won’t need to spend time on wireframing, design, or testing. Ready-made solutions offer essential functionality as well as free support. In some cases, you can change the HTML layout of your site to give it a fresh feel. You’ll pay a fixed fee for hosting your platform, plus if you want small customizations you can always pay extra to implement those.

Building from scratch. If you have a unique idea, then you need a custom developed product. A custom product can give you lots of flexibility in terms of features, the user interface, and the user experience.

At e-Marketplace Solutions we provide you ready-made solution with all common P2P marketplace features, so you can quickly launch your marketplace as quickly as possible to validate your P2P marketplace idea. We also provide the customization to fit your unique requirements